If it is expected that it will be hard to sell a security, which of the following will be added?
A) Inflation risk premium
B) Default risk premium
C) Liquidity premium
D) Maturity risk premium
E) None of the above

Question

Quizplus · Accepted Answer

If it is expected that it will be hard to sell a security, a liquidity premium will be added. This is because investors require compensation for the increased risk of not being able to sell the security quickly or easily if needed. The other premiums listed (inflation risk, default risk, and maturity risk) are not directly related to the ease of selling a security.

If It Is Expected That It Will Be Hard to Sell